Prosecutors sought to hammer home their case against two former Bear Stearns hedge fund managers yesterday, emphasizing what they called the two men’s “black and white” lies.

“This trial isn’t really about hedge fund strategy,” Ilene Jaroslaw, assistant U.S. attorney, told jurors during her closing argument yesterday. “This case is about what the defendants said and what they did, and all their lies.”

Those defendants, Ralph Cioffi and Matthew Tannin, are accused of misleading investors in their two hedge funds, which collapsed two-and-a-half years ago amidst the early days of the subprime mortgage crisis. The failure of the High-Grade Structured Credit Fund and a more highly-levered sister fund cost investors some $1.6 billion and helped lead to the eventual collapse of Bear Stearns itself.

Jaroslaw blasted Cioffi for lying “because the market was in turmoil and he knew it. And the confidence of investors was in jeopardy. So he lied to give them false confidence.”

“When they hit rough seas for the first time in the history of the funds, they thought the law and the rules applied to everyone else but them,” she added.

Unsurprisingly, Cioffi’s lawyer took aim at just about everything the prosecution did, from where the case was tried to their use of evidence. The prosecutors have been maligned in the press for what many saw as a weak and poorly-planned case.

Dane Butswinkas said he was “surprised to hear the prosecution say that the details aren’t important,” and suggested that the government’s tactics created “reasonable doubt.”

He also questioned the venue for the trial, Brooklyn, N.Y., federal court, arguing that the case should have been held across the East River.

“The government didn’t follow the law,” he told the jurors. “The government has to bring the case in the right place,” and since the alleged malfeasance took place at Bear’s offices in Manhattan, that means Manhattan federal court.

Butswinkas is set to finish his closing argument tomorrow, followed by that of Tannin’s lawyers. The case is scheduled to go the jury on Monday. If convicted on all counts, Tannin faces up to 20 years in prison and Cioffi, who is also charged with insider-trading, faces up to 40 years.

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